JUST WHEN YOU CRUSH THE OPPOSITION, your ‘D’ in economics bites you in the butt. If the president of Turkey was beaten and berated at a good British grammar school, I’m sure that’s what he would be thinking. As effective ‘ruler’ of Turkey, President Recep Tayyip Erdogan has played the long game. Over 16 years, he has courted and bedded the country’s urban and rural poor, using religion to show himself a man of the people and garner their votes.

Turkey is a country of 80 million people but only 10 per cent live in the countryside. This is in stark contrast to when the republic was founded in 1923 by a government of the Ankara-based revolutionary group, led by Mustafa Kemal Atatürk and his colleagues. At its foundation, three-quarters of the people lived and worked in the countryside. Founded as a secular country, proud to be followers of Islam, Turkey was intent in keeping religion out of the armed forces and from giving Islamic foundation to the laws and government of the country.

However Erdogan’s ‘rule’ has seen a roll back of the secular Turkey and a move towards Islam – a worrying move, as Turkey has a strategic location between Europe and Asia and despite its membership of the EU customs union, it continues to move away from the west and democracy. In doing this, a division of the relatively wealthy from the poor becomes deeper. As one city shopkeeper put it to me: “Yes, we’re Muslims, but we’re not Arabs. I smoke and I drink alcohol, but I fast for Ramadan.” This view was once held by the majority. Now, I’m not so sure.

Erdogan has forcefully but slowly played the Islamic card. He removed the ban on headscarves; allowed those who attended a madrassa to join the armed forces, overturning a ban that was key to Atatürk’s secular Turkey. He removed the theory of evolution from school textbooks and prohibited alcohol advertising.

He removed his real competition, top people in the armed forces, years ago, then rid himself of the next tier after the ‘coup’. He has muzzled the press with a campaign of arrest, imprisonment and closure.

Erdogan consolidated his grip on the country in elections on 24 June but he already held full control of the nation’s steering wheel. However, Erdogan’s ‘D’ in economics has come back to bite him. Turkey is in an economic pickle and much of it of Erdogan’s own making, as illustrated by the decline of the Turkish lira since 2014. One Turkish lira is now worth just over 20 cents – that’s a decline of more than 60 per cent in just over four years.

I would place the whole of the blame squarely on Erdogan. You can’t say that you believe higher interest rates cause faster inflation and retain credibility in the financial markets. You can’t take hold of the financial controls of the entire economy without some knowledge and ability. This recent pronouncements that citizens should convert foreign currency accounts into lira merely reinforce worries about currency control and promote capital flight.

Erdogan’s pronouncement was simple enough. “I invite citizens who hold accounts in foreign currency to convert it to Turkish lira. Let’s all teach a lesson to those who try to rattle Turkey’s economy and stability through foreign exchange rate.” But it led to one of the worst trading days for the country’s currency.

Turkey’s economy places it above South Korea in size and just slightly smaller than Italy at 13th on tables that place the UK in ninth position. It is a fast-growth economy and one that recovered more quickly than others from the financial crisis, averaging seven per cent per annum. The growth continued last year, making Turkey the fastest-growing European economy, albeit exhibiting lower growth at the end of the year than in its third quarter.

It is thought that the growth has led to imports being sucked in by consumers. This has contributed to both inflation and the 5.5 per cent trade deficit, which itself leads to a need for outside funding. These factors have meant that the heavily inexperienced government has attempted ‘control’ of the economy, which has reduced their credibility, both in announcement of their intentions and the impact of substantial rises in interest rates, the most recent to 16.5 per cent.

In dealing with Turkey, all of this makes life difficult. As I reported some time ago, the monitoring of big exporters such as Hatsan can place an administrative burden that smaller suppliers find difficult to carry. Arrest and detention of executives, while not commonplace, is encountered.

The simplistic ‘matching’ of invoices to payments, without accounting for product failure and credits, can make transactions very difficult. On the other side of the coin, Turkish suppliers offer better and better quality, and the continued slide of their currency makes the dollar or euro billings for their products increasingly attractive to them.

What all UK customers should consider are the pros and cons of now dealing with Turkey. The biggest worry is the uncontrolled growth and inflation in Turkey. Funding increased production continues to be a worry for some suppliers. Despite inflation and the low value of the lira, some inputs can keep pace with the increased margin that dollar-euro pricing offers, particularly in petrol/diesel and freight costs. Getting bank loans and capital can constrain growth and, overtrading can lead to failure.

On the other hand; the quality of the moly- chrome steel used in actions and the quality of barrel-making has meant quality products are more common. You don’t need any more proof of this than to see ‘Made in Italy’ stamped on product assemblies going to Italy to be finished and shipped.

Also, plastic injection moulding has come on leaps and bounds in Turkey. On the back of a thriving car industry, the sporting gun industry has benefited.

It is positive that Turkey is a member of the EU customs union. For a while at least, this makes the process of importing from Turkey a simpler task.

Lastly, I have found Turkish partners to be some of the best suppliers. If you don’t break your word, they won’t let you down, but be sure you know what you’ve promised because they will remember and expect you to perform too. Turkey has much to recommend it.



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